Canadian natural gas prices at 16-month high

Canadian oil and gas prices are in the midst of a nice rebound after trading at some of their lowest levels for much of the past year.

Canadian benchmark natural gas prices shot up to $3.47 per gigajoule,, according to energy data provider NGX. The last time prices traced that level was 16 months ago, on November 2011.

Canadian producers have been aggressively cutting natural gas production since prices touched a decade low last year, but are rebounding on cooler weather and lower inventories.

The benchmark AECO prices rose in tandem with American natural gas prices, which also hit an 18-month high today, buoyed by cooler weather.

“Despite bearish weekly storage numbers, Henry Hub (spot) natural gas prices rose by 8% this week to close at US$4.02/mmBtu, the highest level since September 2011 and 31% above the 2013 low in January,” said Greg Pardy, co-head global energy research at RBC Capital.

Meanwhile, Western Canada Select prices rose to narrow its discount against West Texas Intermediate to the lowest level in five months. The Canadian heavy crude was trading $16.50 per barrel below WTI to reach $76.26 at 1.30 pm ET. It last traced those prices on October 17, 2012, according to Bloomberg data.

North American crude benchmarks are narrowing the discounts versus Brent crude index which has been waylaid by the Cyprus debt crisis.

Brent crude prices slipped in choppy trading on Friday, buffeted by the financial drama in Cyprus, while U.S. crude edged higher and the spread between the two contracts narrowed to less than $15 a barrel – the narrowest since January.